I just finished the third (of three) Chartered Financial Analyst (CFA) exams. I believe I passed, (results will not be available until September.) I’ve taken more than my share of tests in my life, and these three exams have been the three hardest. I decided to publish my advice for others becoming CFA Candidates because 1) my partner at Alternative Energy Stocks, Charles Morand has just become a CFA Candidate (he’ll take the first exam in December), and 2) there is little advice available online.
VI. Buy two of your chosen model of calculator The reason for this is because, if your battery happens to die in the middle of the test, you don’t want to waste precious minutes trying to change it. I never had a battery die on either of my used calculators, but why take the chance (especially when you may never use the $5 extra battery.) The two models allowed are the HP 12C and the TI Business Analyst Plus. The links are to eBay, where I was able to buy my calculators for less than $20 each.
V. The CFA Institute recommends a minimum of 250 hours to study for each exam. They are not joking. I studied around 300 hours for each exam. If you can only put in 200 hours, you will not pass unless you are considerably smarter than I am. The candidate sitting next to me on level III told me he had taken off 10 days to go skiing this spring. He didn’t finish two questions on the morning portion of the exam, and I got the impression that he had trouble with the parts he did finish. He seemed angry about how hard the exam was.
IV. Make sure your job and your family are supportive. Ideally, you should work someplace that gives you time to study, as well as support. If you have a wife and kids, don’t plan to see them on weekends for several months each year for at least three years. Make sure they understand that, and are supportive. I had a study partner for level I who had kids, and frequently would miss study dates because of family obligations. This was his third attempt to study for level one, and he was so unprepared in June that he did not even bother to take the test.
III. Do all the problems in the coursework. If you just read the material without doing the problems, you will have no idea what they’ll be asking for on many of the questions on the exam.
II. Practice exams are also a must. I’ve found that the online exams available from the CFA Institute are harder than the actual test, so I do not bother with anything but the one they give away for free. On level III, however, the last three years of essay questions are available. I found these extremely useful. Exam prep providers Schweser and Stalla also offer practice exams. For level II and III, I used the Schweser practice exam book from the previous year, which I bought on eBay, and found it very helpful. I spoke to another candidate between sessions on level III who had used both. He had switched providers because he was taking level III for the third time, and needed to try something different. He thought Schweser exams are at about the same level as the real thing, while the Stalla exams are too easy.
I. Exam Prep courses and videos. I never took an exam prep course from one of the providers, since they are quite expensive and I was paying my own way. However, I did use year-old videos (at level one two-year old) from Schweser, and found them an excellent way to review the material over the last month of prep. I also bought these on eBay. Exam prep providers also offer condensed versions of the curriculum. I never used these, so I can’t recommend one over the other. The same candidate referenced in II above said that Stalla was better at explaining the concepts than Schweser.
In short, eBay is your friend. Practice questions are your friends. Your current friends (and possibly family) may have to be reminded of your name, you will have seen so little of them while you were studying.
The CFA program is an incredible amount of work, but you can get a lot more out of it than just better pay or job prospects. It has made me a better analyst. And having missed the last three, I’ll appreciate Spring more for years to come.
UPDATE 5/19/2011: There are six more useful tips here.